How do I draft a legally binding "Tenants in Common Agreement" to define ownership shares and responsibilities for a co-owned California property?

To draft a legally binding Tenants in Common Agreement, you must create a written contract defining each owner's shares, rights, and responsibilities, which all co-owners must sign. This agreement works alongside the property deed to govern your co-ownership. Here is how to create the agreement: Step 1: Define Ownership Shares and Contributions Clearly state the ownership percentage for each tenant in common. California law presumes equal shares unless you specify otherwise. List each owner's initial financial contribution toward the down payment and closing costs. Step 2: Outline Payment of Ongoing Expenses Detail how you will share recurring costs. This includes mortgage payments, property taxes, insurance, HOA fees, and utilities. Specify if these costs will be split according to ownership percentage or another formula. Create a joint bank account for these payments. Step 3: Establish Management and Maintenance Rules Decide who is responsible for managing the property and coordinating repairs. Set a budget for routine maintenance and establish a process for approving larger expenses, including how to fund a reserve for unexpected repairs. Step 4: Create a Clear Exit Strategy This is the most critical part. Include a "right of first refusal" clause, which gives the other owners the option to buy out an owner who wants to sell. Define how you will determine the property's sale price (e.g., average of two independent appraisals) and set a timeline for the buyout process. This helps avoid a court-ordered sale, known as a partition action. Step 5: Address Default and Dispute Resolution Outline the consequences if an owner fails to pay their share of expenses. This could include late fees or a process where the other owners can cover the payment and place a lien on the defaulting owner's share. Agree to use mediation to resolve disputes before pursuing litigation. Step 6: Finalize and Sign the Agreement Put the agreement in writing. Under California's Statute of Frauds, contracts for real estate must be in writing to be enforceable. All co-owners must sign the document. While not required, having the signatures notarized adds a layer of legal formality. Important considerations: This agreement should be completed before you close on the property. Ensure the property's grant deed explicitly states you are taking title as "tenants in common" and references the ownership percentages. Note: A tenancy in common does not have an automatic right of survivorship. When an owner dies, their share passes to their heirs or beneficiaries as specified in their will or trust, not to the other co-owners. This is general information and does not constitute legal advice. For complex situations, consult with a qualified California real estate attorney to draft or review your agreement to ensure it protects all parties.